FIDIC and Integrity:

A Status Report
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J. M. BOYD, PH.D.;

AND

J. D. PADILLA, PH.D.

ABSTRACT: We discuss the efforts over the last 10 years of the International Federation
of Consulting Engineers FIDIC to fight corruption in the construction industry. We
describe the Business Integrity Management System, which was developed by the industry
to manage the integrity of a consulting firm, and a parallel system Government
Procurement Integrity System to manage the integrity of a government procurement
department. FIDIC suggests that the industry cannot achieve a successful outcome in this
effort to fight corruption without the inclusion of all of the participants including the
clients, the financial community, and the government.

dration Internationale des IngnieursConseils FIDIC is the organization representing the international consulting
engineering industry. Founded in 1913
and headquartered in Geneva, it represents more than 45,000 firms in 81
countries. In addition to representing the industry and advocating on its behalf, FIDIC collects best practices and provides
guidelines and policies based on these practices for the use of
theconsultingengineeringindustry.
The business relationship that consulting engineering
firms strive to create with their clients is that of trusted advisor, a
relationship that cannot thrive unless the firm acts with integrity toward all of its stakeholders, whether internal or external
to the business. This is such a key component of success that
integrity, along with quality and sustainability, are the values
onwhichFIDICisbased.
According to FIDIC, corruptionthe opposite of
integrityhas three components: 1 the demand side that
asks for corruption; 2 the supply side that provides it; and
3 the condoning side that knows that it is going on but
does nothing to prevent it.
In many parts of the world, this problem is embedded in
the very foundation of public service. In these areas, public servants are not paid a living wage on the assumption that their
incomes will be supplemented by the proceeds of bribery and
corruption. This is referred to as systemic corruption and cannot be eradicated without major shifts in government practice
Leadership and Management in Engineering

in these countries. At a time when the industry is thriving,

many reputable international firms are withdrawing from the
business of providing services in these areasbut the local
firmscannotleave.

ACTIVITIES TO OPPOSE CORRUPTION

In an effort to maintain the health of the consulting engineering industry, for many years FIDIC has been actively
developing tools and policies that address corruption.
In 1996 FIDIC issued a policy statement as a first step
toward exploring ways to protect the consulting industry
from corruption. This policy statement concludes that corruption is basically wrong because it undermines the values
of society, breeds cynicism, and demeans the individuals involved. It involves more than stealing funds, it amounts to
stealing trust. A formal effort to identify specific courses of
action that could lead to reduced corruption in consulting
engineering began in 1998. This led to the proposal to develop a practical tool, namely a comprehensive Business Integrity Management System BIMS for consulting firms. In
recognition of the multifaceted nature of corruption, in 2007
a parallel Government Procurement Integrity Management
System GPIMS was developed for organizations that procured consulting services.
Recently, FIDIC has been involved in redefining what it
means to incorporate integrity and sustainability as part of its
definition of quality service.

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Recognizing the importance of a united perspective in

bringing corruption under control, FIDIC has been interfacing with the Multilateral Development Banks MDBs,
with multinational associations of contractors, and with organizations such as Transparency International, the Organization for Economic Cooperation and Development and the
United Nations, in its efforts to promote improved conditions of integrity on an international basis.
Recently, FIDIC conducted a one-day workshop in
Washington, D.C., with invited members of the major
MDBs on the issue of integrity management. At this event,
FIDIC sought to encourage the banks to adopt a broader
perspective, including prevention, as well as prosecution, in
their efforts to encourage integrity. The banks are developing
red flag tools so that in-country bank staff can more readily
identify signs of corruption on projects. In FIDICs opinion,
this effort could be further developed as a tool to prevent
corruption in the first place. FIDIC has indicated that it
would welcome the opportunity to work with the banks on
such a program.
Long-term discussions with the Confederation of International Contractors Associations have been leading toward a
joint policy statement on corruption and FIDIC recently
provided information on its activities and systems to the European International Contractors to assist in the formulation
of that groups anticorruption activities. Finally, FIDIC has
enjoyed a longer term supportive role with Transparency International in its efforts to combat corruption.

Business Integrity Management System

The FIDIC has chosen the term Integrity Management
purposely. The Federation advocates ethical integrity to fight
corruption and an integrated management system as an approach to control and verify its performance in this regard. It
begins with a firms commitment to a Code of Conduct on
behalf of all of its members, and leadership that demonstrates
this commitment in a clear and visible way. The chief executive officer CEO must lead the formulation of the Code of
Conduct and in the allocation of resources to the integrity
management initiative. There should be no misunderstanding that top management demands compliance to integrity
values, and is prepared to take the necessary actions for
achieving integrity.
Communication, coordination, and involvement of all
staff are necessary to ensure the delivery of consulting services
with integrity. Hence, identification of potential areas of corruption, and management control of key processes for the
objective of integrity within the firm, become critical. Documentation of these key processes should be continuous in
order to demonstrate integrity. Management should periodically analyze and review the firms BIMS, to insure its conJULY 2009

tinued suitability and effectiveness, and to keep it permanently updated

Management of the integrity system should be a significant board-level role and the board should periodically satisfy
itself that the system is in place and functioning. An annual
statement about the performance of the BIMS system should
be made in the annual report of the company.
Consulting firms frequently work with subcontractors
consultants who handle specific aspects of the project delivery. In such cases, it is considered to be the responsibility
of the prime consultant to verify the commitment of its
subcontractors to act with integrity and preferably have a
system in place similar to BIMS.
The Business Integrity Management System has been established in such a manner that it can be independently
verified as an ISO 9000 management process.
Government Procurement Integrity Management System
The GPIMS is exactly analogous to BIMS but is intended to
be part of a procurement departments management system.
It incorporates the Code of Conduct, the leadership requirements, the review process to identify potential weaknesses or
opportunities for corruption, measurement and documentation of critical parameters, and board-level reporting.
Model Representative Agreement
One of the most dangerous areas of a consulting firms activities that might lead to incidents of corruption lies in the
appointment of a local representative who acts on behalf of
the firm to obtain contracts usually in a different country.
Such representatives may resort to bribery, which may or
may not be done with the full awareness of the firm, particularly in those countries in which bribery is an accepted practice for obtaining work. The firm hiring the local representative may not even have very detailed knowledge of the
character of the individual who assumes that role.
To provide tools for this situation, FIDIC has developed a
Model Representatives Agreement, which clearly stipulates
the limitations of such an entity while acting on behalf of the
retaining firm.
Training, Installation Kits, and the Users Club
There are two levels of training that have been implemented
by FIDIC in conjunction with the introduction of BIMS.
The first is a series of seminars which have been presented
around the world with the intention of making the industry
aware of the availability of the system.
The second level of training arises in conjunction with the
implementation of a BIMS system in a firm and is intended
to facilitate individual staff familiarization with the system
and the way in which it works. In 2002 a BIMS training
manual was implemented to provide the basis for such ac-

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tivities internal to the firm. FIDIC has also developed a suite

of all the necessary documents, along with examples of their
use, on a compact disk, and has instituted a users club to
facilitate the exchange of information from one organization
to another to aid in the further development of the system.
WHATS WORKING, WHATS NOT
To date only about 100 companies have installed BIMS in
their organizations and the number of new organizations
considering such a move has dropped to a mere trickle. In
spite of a promising interest in becoming a test case in one
government department, no organizations have stepped forward to become a test case for GPIMS.
Even though most consulting firms are doing their best
to define and implement anticorruption policies, many lack
consistency in the day-to-day implementation of such policies and fail to obtain systematic feedback, which may improve their integrity management process. But while companies establish their own procedures to assure integrity and
fight corruption, they are not following a BIMS roadmap. In
a recent survey of the industry, several reasons for this situation became apparent:
While a system like BIMS offers a significant improvement over home-brewed alternatives, implementation
costs money and places the firm at a competitive disadvantage when bidding for work.
On the other hand, clients have not moved ahead to recognize companies with a BIMS in place and give them
some kind of competitive benefit during the selection process.
Many firms question the efficacy of such systems in situations where there is systemic corruption and would
rather vote with their feet and make a decision not to
offer services in such an environment. Risk to their reputation is considered too high in such localities.
Companies question the true commitment of their clients
to a corruption-free environment, arguing that, if the
commitment were truly there, the client would ask for
evidence of integrity management in the firm as part of
the statement of qualifications submitted in response to a
request for proposal. They quote the increased incidence of
similar demands for information on health and safety policies of the firm as evidence that many of those clients are
taking a firm stand on project accidents.
Many go so far as to suggest that if clients are not overtly
opposed to corruption and exercising every effort to stamp
it out, then they are complicit in it.
CRITERIA FOR SUCCESS
In summary, the systems are available, they are not being
broadly implemented, and progress to stamp out corruption
Leadership and Management in Engineering

is not being made. What is required to make progress in this

endeavor?
The voice of civil society is certainly growing louder in its
demands to governments and industry for transparency and
integrity, but there also has to be demand for integrity on the
part of client groups. In the same way that the CEO of a
company has to be seen to value integrity to convince the
ordinary staff member that this is an attribute of the firm
and departure from expected behavior is not acceptable, clients need to use every opportunity to demonstrate adherence
to these values and critical interest in the steps taken by their
service suppliers to control their operations.
It is not just the direct client who should have an interest
in this but also the banks who fund the projects that the
client will carry out. The FIDIC will continue to talk to
client groups to encourage this attitude. Leadership in this
area is difficult. Consulting firms who complain about demands for bribes run the risk of losing projects at a minimum and more often than not, losing all ability to offer
services in the region. Banks are concerned that if they make
the conditions for loans too onerous, they will not be competitive in relation to other banks that have no such demands. Governmentsparticularly developing country
governmentsclaim that they cannot afford to pay living
wages, and there are certainly lots of examples of crusaders in
those governments who paid with their lives for their zeal in
rooting out corruption.
Nevertheless leadership is required if we are to make
progress. For that purpose, FIDIC has decided to conduct an
industry survey of perception among member firms about
the relative corruption taking place in different parts of the
world and to publish the results of the survey.
Finally, level playing fields are important. Entire consulting firms are now blacklisted and banned from further
projects for a period of time for the errors of individual staff
members. This would be a more palatable approach if entire
government departments were similarly blacklisted and
banned from development loans for the actions of individual
employees.
CONCLUSION
FIDIC has been energetically promoting integrity for a long
time, and its systems have been developed and in place
within the industry for a number of years. There is evidence
to support the idea that a formal and systematic approach
towards the management of integrity works better than sporadic efforts developed by individual companies, yet the idea
has been slow to achieve success in the consulting industry.
Combating corruption requires a concerted effort by everyone that is involved in projectsclients, contractors, government procurement groups, and funding agencies alikein
helping to prevent, and not just to punish. The industry
cannot solve the problem single-handedly.

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ACKNOWLEDGMENTS
This paper is based on the work developed by the FIDIC
Integrity Management Task Force, chaired by Felipe Ochoa,
and the Joint Working Group on Integrity, created under
FIDICs leadership, with participation by the World Bank,
the Inter American Development Bank, and the Pan American Federation of Consultants.
John Boyd is the president of the International Federation of Consulting Engineers and has 34 years of
experience in the industry with Golder Associates

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where he has worked on a large variety of projects in

many countries. He can be reached by e-mail at
jboyd@golder.com. Jorge Diaz Padilla is past president
of FIDIC and is currently chair of the organizations
Integrity Management Committee. He is the CEO of a
consulting firm headquartered in Mexico that offers
project and construction management services based
on a quality and integrity system certified under the
ISO standard. He can be reached by e-mail at
jdpg@systec.com.mx.
LME

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